<PAGE>

                                UNITED STATES
                      SECURITIES AND EXCHANGE COMMISSION
                            Washington, D.C. 20549
 
                                   FORM 10-Q
 
(Mark One)

[ X X ] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES 
        EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 1997

                                    OR

[    ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES 
       EXCHANGE ACT OF 1934

For the transition period from ___________________ to ___________________ 
                               ___________________ 

For Quarter Ended September 30, 1997               Commission File No. 0-21390

                               AFG Investment Trust B
                          -----------------------------------
                (Exact name of registrant as specified in its charter)

               Delaware                                  04-3157230
     (State or other jurisdiction of                   (IRS Employer
      incorporation or organization)                 Identification No.)

       88 Broad Street, Boston, MA                          02110
  (Address of principal executive offices)               (Zip Code)

         Registrant's telephone number, including area code (617) 854-5800
                                                            --------------

        _________________________________________________________________
            (Former name, former address and former fiscal year,
                      if changed since last report.)
 
    Indicate by check mark whether the registrant (1) has filed all reports 
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 
1934 during the preceding 12 months (or for such shorter period that the 
registrant was required to file such reports), and (2) has been subject to 
such filing requirements for the past 90 days.  Yes  X   No 
                                                    ---     ---

               APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY
                  PROCEEDINGS DURING THE PRECEDING FIVE YEARS
 
    Indicate by check mark whether the registrant has filed all documents and
reports required to be filed by Sections 12, 13, or 15(d) of the Securities
Exchange Act of 1934 subsequent to the distribution of securities under a plan
confirmed by a court during the preceding 12 months (or for such shorter period
that the registrant was required to file such reports), and (2) has been subject
to such filing requirements for the past 90 days.  Yes ___  No ___


<PAGE>

                             AFG INVESTMENT TRUST B
 
                                   FORM 10-Q
 
                                     INDEX

                                                                PAGE
                                                               -----
PART I FINANCIAL INFORMATION:

  Item 1. Financial Statements

    Statement of Financial Position
      at September 30, 1997 and December 31, 1996............      3

    Statement of Operations
      for the three and nine months ended 
      September 30, 1997 and 1996............................      4

    Statement of Cash Flows
      for the nine months ended September 30, 1997 and 1996..      5

    Notes to the Financial Statements........................   6-10


  Item 2. Management's Discussion and Analysis of
    Financial Condition and Results of Operations............  11-16


PART II OTHER INFORMATION:

  Items 1-6..................................................     17


                                       2

<PAGE>

                             AFG INVESTMENT TRUST B
 
                        STATEMENT OF FINANCIAL POSITION
                    September 30, 1997 and December 31, 1996

                                  (Unaudited)

<TABLE>
<CAPTION>
                                                                                     SEPTEMBER 30,  DECEMBER 31,
                                                                                         1997           1996
                                                                                     -------------  -------------
<S>                                                                                  <C>            <C>
ASSETS
Cash and cash equivalents..........................................................  $   3,852,915  $   2,829,093
Restricted cash....................................................................      3,975,308       --
Rents receivable...................................................................        376,314        339,293
Accounts receivable--affiliate.....................................................        239,875        154,395
Equipment at cost, net of accumulated depreciation of $14,554,790 and $12,161,949
  at September 30, 1997 and December 31, 1996, respectively........................     10,181,038     13,307,711
Organization costs, net of accumulated amortization of $5,000 and $4,333 at
  September 30, 1997 and December 31, 1996, respectively...........................       --                  667
                                                                                     -------------  -------------
    Total assets...................................................................  $  18,625,450  $  16,631,159
                                                                                     -------------  -------------
                                                                                     -------------  -------------
LIABILITIES AND PARTICIPANTS' CAPITAL
Notes payable......................................................................  $   2,567,936  $   4,352,811
Accrued interest...................................................................         26,811         36,571
Accrued liabilities................................................................         22,500         23,250
Accrued liabilities--affiliate.....................................................         53,124         47,178
Deferred rental income.............................................................         91,901         45,550
Cash distributions payable to participants.........................................        235,578        200,199
                                                                                     -------------  -------------
    Total liabilities..............................................................      2,997,850      4,705,559
                                                                                     -------------  -------------
Participants' capital (deficit):
  Managing Trustee.................................................................        (12,827)       (30,382)
  Special Beneficiary..............................................................       (106,953)      (257,894)
  Class A Beneficiary Interests (665,494 Interests; initial purchase price of $25
    each)..........................................................................     10,926,773     12,213,876
  Class B Beneficiary Interests (1,000,961 Interests; initial purchase price of $5
    each)..........................................................................      4,820,607       --
                                                                                     -------------  -------------
    Total participants' capital....................................................     15,627,600     11,925,600
                                                                                     -------------  -------------
    Total liabilities and participants' capital....................................  $  18,625,450  $  16,631,159
                                                                                     -------------  -------------
                                                                                     -------------  -------------
</TABLE>

                    The accompanying notes are an integral part
                         of these financial statements.

                                       3
<PAGE>

                             AFG INVESTMENT TRUST B
 
                            STATEMENT OF OPERATIONS
          for the three and nine months ended September 30, 1997 and 1996

                                  (Unaudited)
 
<TABLE>
<CAPTION>
                                                                  THREE MONTHS                NINE MONTHS
                                                              ENDED SEPTEMBER 30,         ENDED SEPTEMBER 30,
                                                           --------------------------  --------------------------
<S>                                                        <C>           <C>           <C>           <C>
                                                               1997          1996          1997          1996
                                                           ------------  ------------  ------------  ------------
Income:
  Lease revenue..........................................  $  1,281,262  $  1,549,287  $  3,991,832  $  4,434,013
  Interest income........................................        88,279        29,423       166,353        71,433
  Gain (loss) on sale of equipment.......................       118,513        (1,063)      124,976      (275,888)
                                                           ------------  ------------  ------------  ------------
    Total income.........................................     1,488,054     1,577,647     4,283,161     4,229,558
                                                           ------------  ------------  ------------  ------------
Expenses:
  Depreciation and amortization..........................       956,700     1,058,070     2,987,813     3,289,919
  Interest expense.......................................        43,933        86,503       159,719       309,697
  Equipment management fees--affiliate...................        56,211        66,192       170,714       187,687
  Operating expenses--affiliate..........................       117,848        37,921       214,427        86,211
                                                           ------------  ------------  ------------  ------------
    Total expenses.......................................     1,174,692     1,248,686     3,532,673     3,873,514
                                                           ------------  ------------  ------------  ------------
Net income...............................................  $    313,362  $    328,961  $    750,488  $    356,044
                                                           ------------  ------------  ------------  ------------
                                                           ------------  ------------  ------------  ------------
Net income
    per Class A Beneficiary Interest.....................  $    --       $       0.45  $       0.60  $       0.49
                                                           ------------  ------------  ------------  ------------
                                                           ------------  ------------  ------------  ------------
    per Class B Beneficiary Interest.....................  $    --       $    --       $    --       $    --
                                                           ------------  ------------  ------------  ------------
                                                           ------------  ------------  ------------  ------------
Cash distributions declared
    per Class A Beneficiary Interest.....................  $       1.71  $       0.38  $       2.53  $       1.01
                                                           ------------  ------------  ------------  ------------
                                                           ------------  ------------  ------------  ------------
    per Class B Beneficiary Interest.....................  $       0.13  $    --       $       0.13  $    --
                                                           ------------  ------------  ------------  ------------
                                                           ------------  ------------  ------------  ------------
</TABLE>
 
                    The accompanying notes are an integral part
                         of these financial statements.

                                       4
<PAGE>

                              AFG INVESTMENT TRUST

                             STATEMENT OF CASH FLOWS
              for the nine months ended September 30, 1997 and 1996

                                  (Unaudited)
 
<TABLE>
<CAPTION>
                                                                       1997         1996
                                                                    -----------  -----------
<S>                                                                 <C>          <C>
Cash flows from (used in) operating activities:
Net income........................................................  $   750,488  $   356,044

Adjustments to reconcile net income to net cash
  from operating activities:
    Depreciation and amortization.................................    2,987,813    3,289,919
    (Gain) loss on sale of equipment..............................     (124,976)     275,888

Changes in assets and liabilities
  Decrease (increase) in:
    rents receivable..............................................      (37,021)     345,216
    accounts receivable--affiliate................................      (85,480)     (92,060)
  Increase (decrease) in:
    accrued interest..............................................       (9,760)     (72,469)
    accrued liabilities...........................................         (750)      (1,250)
    accrued liabilities--affiliate................................        5,946       22,580
    deferred rental income........................................       46,351      130,459
                                                                    -----------  -----------
      Net cash from operating activities..........................    3,532,611    4,254,327
                                                                    -----------  -----------
  Cash flows from (used in) investing activities:
    Purchase of equipment.........................................      --        (1,441,796)
    Proceeds from equipment sales.................................      264,503    1,846,115
                                                                    -----------  -----------
      Net cash from investing activities..........................      264,503      404,319
                                                                    -----------  -----------
  Cash flows from (used in) financing activities:
    Proceeds from capital contributions...........................    5,004,805      --
    Payment of offering costs.....................................      (50,048)     --
    Proceeds from notes payable...................................      --           997,888
    Principal payments--notes payable.............................   (1,784,875)  (2,803,908)
    Distributions paid............................................   (1,967,866)    (692,992)
                                                                    -----------  -----------
      Net cash from (used in) financing activities................    1,202,016   (2,499,012)
                                                                    -----------  -----------

  Net increase in cash and cash equivalents and restricted cash...    4,999,130    2,159,634

  Cash and cash equivalents at beginning of period................    2,829,093      337,293
                                                                    -----------  -----------
  Cash and cash equivalents and restricted cash at end of period..  $ 7,828,223  $ 2,496,927
                                                                    -----------  -----------
                                                                    -----------  -----------
  Supplemental disclosure of cash flow information:
    Cash paid during the period for interest......................  $   169,479  $   382,166
                                                                    -----------  -----------
                                                                    -----------  -----------
</TABLE>

                    The accompanying notes are an integral part
                         of these financial statements.

                                       5

<PAGE>
                             AFG Investment Trust B
 
                       Notes to the Financial Statements
 
                               September 30, 1997
                                  (Unaudited)
 
NOTE 1--BASIS OF PRESENTATION
 
    The financial statements presented herein are prepared in conformity with
generally accepted accounting principles and the instructions for preparing Form
10-Q under Rule 10-01 of Regulation S-X of the Securities and Exchange
Commission and are unaudited. As such, these financial statements do not include
all information and footnote disclosures required under generally accepted
accounting principles for complete financial statements and, accordingly, the
accompanying financial statements should be read in conjunction with the
footnotes presented in the 1996 Annual Report. Except as disclosed herein, there
has been no material change to the information presented in the footnotes to the
1996 Annual Report.

    In the opinion of management, all adjustments (consisting of normal and
recurring adjustments) considered necessary to present fairly the financial
position at September 30, 1997 and December 31, 1996 and results of operations
for the three and nine month periods ended September 30, 1997 and 1996 have been
made and are reflected.
 
NOTE 2--CASH
 
    At September 30, 1997, the Trust had $7,720,000 invested in reverse
repurchase agreements secured by U.S. Treasury Bills or interests in U.S.
Government securities.
 
NOTE 3--REVENUE RECOGNITION
 
    Rents are payable to the Trust monthly, quarterly or semi-annually and no
significant amounts are calculated on factors other than the passage of time.
Rents from Reno Air, Inc. ("Reno Air"), as provided for in the lease agreement,
are adjusted monthly for changes in the London Inter-Bank Offered Rate
("LIBOR"). Future rents from Reno Air, included below, reflect the most recent
LIBOR effected rental payment. The leases are accounted for as operating leases
and are noncancellable. Rents received prior to their due dates are deferred.
Future minimum rents of $3,801,527 are due as follows:
 
<TABLE>
<S>                                                                               <C>
For the year ending September 30, 1998                                            $2,656,877
                                  1999                                               503,820
                                  2000                                               259,959
                                  2001                                               181,521
                                  2002                                               159,480
                            Thereafter                                                39,870
                                                                                   ---------
                                 Total                                            $3,801,527
                                                                                   =========
</TABLE>
 
                                       6
<PAGE>
                             AFG Investment Trust B
 
                 Notes to the Financial Statements (Continued)
 
                               September 30, 1997
                                  (Unaudited)
 
NOTE 4--EQUIPMENT
 
    The following is a summary of equipment owned by the Trust at September 30,
1997. In the opinion of Equis Financial Group Limited Partnership ("EFG"), the
acquisition cost of the equipment did not exceed its fair market value.
 
<TABLE>
<CAPTION>
                                                                                         REMAINING
                                                                                        LEASE TERM         EQUIPMENT
EQUIPMENT TYPE                                                                           (MONTHS)           AT COST
--------------                                                                         -------------      ------------
<S>                                                                                    <C>                <C>
Aircraft.............................................................................           3-63      $  8,018,105
Materials handling...................................................................           3-36         4,408,030
Computers and peripherals............................................................           0-15         4,241,026
Communications.......................................................................           0-15         3,039,422
General plant and warehouse..........................................................              3         1,576,077
Construction and mining..............................................................           0-39         1,200,577
Retail store fixtures................................................................            0-6         1,101,551
Manufacturing........................................................................            0-3           449,902
Furniture and fixtures...............................................................              1           284,019
Tractors and heavy duty trucks.......................................................           2-24           245,851
Trailers/intermodal containers.......................................................            3-9           128,443
Photocopying.........................................................................            0-2            42,825
                                                                                                          ------------
                                                                                Total equipment cost        24,735,828
                                                                            Accumulated depreciation       (14,554,790)
                                                                                                          ------------
                                                          Equipment, net of accumulated depreciation      $ 10,181,038
                                                                                                          ------------
                                                                                                          ------------
</TABLE>
 
    At September 30, 1997, the Trust's equipment portfolio included equipment
having a proportionate original cost of $11,023,146, representing approximately
45% of total equipment cost.
 
    At September 30, 1997, the cost and net book value of equipment held for
sale or re-lease was approximately $382,000 and $69,000, respectively. The
Managing Trustee is actively seeking the sale or re-lease of all equipment not
on lease. In addition, the summary above also includes equipment being leased on
a month-to-month basis.
 
NOTE 5--RELATED PARTY TRANSACTIONS
 
    All operating expenses incurred by the Trust are paid by EFG on behalf of 
the Trust and EFG is reimbursed at its actual cost for such expenditures. 
Fees and other costs incurred during the nine month periods ended September 
30, 1997 and 1996, which were paid or accrued by the Trust to EFG or its 
Affiliates, are as follows:
 
<TABLE>
<CAPTION>
                                                                                               1997            1996
                                                                                            ----------      ----------
<S>                                                                                         <C>             <C>
Reimbursement of offering costs...........................................................  $   50,048      $   --
Equipment acquisition fees................................................................      --              52,786
Equipment management fees.................................................................     170,714         187,687
Administrative charges....................................................................      48,285          15,750
Reimbursable operating expenses
  due to third parties....................................................................     166,142          70,461
                                                                                            ----------      ----------
Total.....................................................................................  $  435,189      $  326,684
                                                                                            ----------      ----------
                                                                                            ----------      ----------
</TABLE>

                                       7
<PAGE>
                             AFG Investment Trust B
 
                 Notes to the Financial Statements (Continued)
 
                               September 30, 1997
                                  (Unaudited)
 
    All rents and proceeds from the sale of equipment are paid directly to
either EFG or to a lender. EFG temporarily deposits collected funds in a
separate interest-bearing escrow account prior to remittance to the Trust. At
September 30, 1997, the Trust was owed $239,875 by EFG for such funds and the
interest thereon. These funds were remitted to the Trust in October 1997.
 
NOTE 6--NOTES PAYABLE
 
    Notes payable at September 30, 1997 consisted of installment notes of
$2,567,936 payable to banks and institutional lenders. The notes bear interest
rates ranging between 5.7% and 7.7%, except for one note which bears a
fluctuating interest rate based on LIBOR (5.66% at September 30, 1997) plus a
margin. All of the installment notes are non-recourse and are collateralized by
the equipment and assignment of the related lease payments. Generally, the
installment notes will be fully amortized by noncancellable rents. However, the
Trust has a balloon payment obligation at the expiration of the primary lease
term related to the Reno Aircraft of $282,421. The carrying amount of notes
payable approximates fair value at September 30, 1997.
 
    The annual maturities of the notes payable are as follows:
 
<TABLE>
<S>                                                                               <C>
For the year ending September 30, 1998                                            $1,646,430
                                  1999                                               250,173
                                  2000                                               116,162
                                  2001                                               125,623
                                  2002                                               135,855
                            Thereafter                                               293,693
                                                                                   ---------
                                 Total                                            $2,567,936
                                                                                   =========
</TABLE>
 
NOTE 7--PROFIT AND LOSS ALLOCATION AND DISTRIBUTION OF DISTRIBUTABLE CASH
 
    Effective for the third quarter of 1997, the allocation of net income or
loss, for financial statement purposes, and distributions of distributable cash
are made to each Participant in accordance with the Trust Agreement, as Amended
(see Note 9).
 
NOTE 8--LEGAL PROCEEDINGS
 
    On June 24, 1997, four plaintiffs (the "Plaintiffs") owning limited partner
units or beneficiary interests in eight investment programs sponsored by EFG
filed a lawsuit, as a derivative action, on behalf of the Trust and 27 other
investment programs (collectively, the "Nominal Defendants") in the Superior
Court of the Commonwealth of Massachusetts for the County of Suffolk against EFG
and certain of EFG's affiliates, including the Managing Trustee of the Trust and
four other wholly-owned subsidiaries of EFG which are the general partner or
managing trustee of one or more of the investment programs, (collectively, the
"Managing Defendants"), and certain other entities and individuals that have
control of the Managing Defendants and the Nominal Defendants (the "Controlling
Defendants"). The Plaintiffs assert claims of breach of fiduciary duty, breach
of contract, unjust enrichment, and equitable relief and seek various remedies,
including compensatory and punitive damages to be determined at trial.
 
    The Managing Trustee and EFG are in the early stages of evaluating the
nature and extent of the claims asserted in this lawsuit and cannot predict its
outcome with any degree of certainty. However, based upon all of 

                                       8
<PAGE>
                             AFG Investment Trust B
 
                 Notes to the Financial Statements (Continued)
 
                               September 30, 1997
                                  (Unaudited)

the facts presently being considered by management, the Managing Trustee and 
EFG do not believe that any likely outcome will have a material adverse 
effect on the Trust. The Managing Trustee, EFG and their affiliates intend to 
vigorously defend against the lawsuit.
 
    On July 27, 1995, EFG, on behalf of the Trust and other EFG-sponsored
investment programs, filed an action in the Commonwealth of Massachusetts
Superior Court Department of the Trial Court in and for the County of Suffolk,
for damages and declaratory relief against a lessee of the Trust, National Steel
Corporation ("National Steel"), under a certain Master Lease Agreement ("MLA")
for the lease of certain equipment. EFG is seeking the reimbursement by National
Steel of certain sales and/or use taxes paid to the State of Illinois and other
remedies provided by the MLA. On August 30, 1995, National Steel filed a Notice
of Removal which removed the case to the United States District Court, District
of Massachusetts. On September 7, 1995, National Steel filed its Answer to EFG's
Complaint along with Affirmative Defenses and Counterclaims, seeking declaratory
relief and specific performance and alleging, among other things, breach of
contract and breach of the implied covenant of good faith and fair dealing. EFG
filed its Answer to these counterclaims on September 29, 1995. Though the
parties have been discussing settlement with respect to this matter for some
time, to date, the negotiations have been unsuccessful. Notwithstanding these
discussions, EFG recently filed an Amended and Supplemental Complaint alleging a
further default by National Steel under the MLA and EFG recently filed a request
for Summary Judgment on all claims and counterclaims. The matter remains pending
before the Court and is scheduled for hearing on EFG's motion in December 1997.
The Trust has not experienced any material losses as a result of this action.
 
    On July 7, 1997, a lessee of the Trust, Montgomery Ward and Company, Inc.,
filed for protection under Chapter 11 of the Bankruptcy Code. The Trust has
filed an appearance of counsel in the Bankruptcy Court process. Equipment leased
to this lessee has a cost and net book value of approximately $2,700,000
and $856,000, respectively, at September 30, 1997. The Trust, through counsel,
has had preliminary discussions with the counsel to the lessee to determine the
intentions of the lessee regarding the lease. Due to the preliminary nature of
the discussions, at this time the Trust is unable to determine the impact of
this bankruptcy proceeding.
 
NOTE 9--ISSUANCE OF CLASS B INTERESTS
 
    On October 26, 1996, the Trust filed a Solicitation Statement with the
United States Securities and Exchange Commission (the "SEC") which subsequently
was sent to the Beneficiaries pursuant to Regulation 14A of Section 14 of the
Securities Exchange Act. The Solicitation Statement sought the consent of the
Beneficiaries to a proposed amendment (the "Amendment") to the Amended and
Restated Declaration of Trust (the "Trust Agreement") which would (i) amend the
provisions of the Trust Agreement governing the redemption of Beneficiary
Interests to permit the Trust to offer to redeem outstanding Beneficiary
Interests at such times, in such amounts, in such manner and at such prices as
the Managing Trustee might determine from time to time, in accordance with
applicable law; and (ii) add a provision to the Trust Agreement that would
permit the Trust to issue, at the discretion of the Managing Trustee and without
further consent or approval of the Beneficiaries, an additional class of
security with such designations, preferences and relative, participating,
optional or other special rights, powers and duties as the Managing Trustee
might affix. The funds obtained through the issuance of such a security would be
used by the Trust to (a) expand redemption opportunities for Beneficiaries
without using Trust funds which might otherwise be available for cash
distributions; and (b) make a special one-time cash distribution to the
Beneficiaries.
 
    Pursuant to the Trust Agreement, the adoption of the Amendment required the
consent of the Beneficiaries holding more than 50% in the aggregate of the
Beneficiary Interests held by all Beneficiaries. A majority of Beneficiary
Interests, representing 369,960 or 55.6% of all Beneficiary Interests, voted in
favor of the Amendment; 69,792 or 10.5% of all Beneficiary Interests voted
against the Amendment; and 24,444 or 3.7% of all Beneficiary Interests
abstained. Approximately 69.8% of all Beneficiary Interests participated in the
vote. Accordingly, the Trust Agreement was amended.

                                       9
<PAGE>
                             AFG Investment Trust B
 
                 Notes to the Financial Statements (Continued)
 
                               September 30, 1997
                                  (Unaudited)

    On February 12, 1997, the Trust filed a Registration Statement on Form S-1
with the SEC, which became effective June 10, 1997. The Registration Statement
covered the issuance and sale of a new class of beneficiary interests in the
Trust (the "Class B Interests"). The characteristics of the Class B Interests,
associated risk factors and other matters of importance to the Beneficiaries and
purchasers of the Class B Interests were set forth in a Prospectus sent to the
Beneficiaries. On July 17, 1997, the offering closed and on July 18, 1997 the
Trust issued 1,000,961 Class B Interests at $5.00 per interest, thereby
generating $5,004,805 in aggregate Class B capital contributions. Class A
Beneficiaries purchased 3,588 Class B Interests, generating $17,940 of such
aggregate capital contributions, and the Special Beneficiary, EFG, purchased
997,373 Class B Interests, generating $4,986,865 of such aggregate capital
contributions.
 
    Subsequently, EFG transferred its Class B Interests to a special-purpose 
company, Equis II Corporation, a Delaware corporation. EFG also transferred 
its ownership of AFG ASIT Corporation, the Managing Trustee of the Trust, to 
Equis II Corporation. As a result, Equis II Corporation has voting control of 
the Trust through its ownership of the majority of all of the Trust's 
outstanding voting interests, as well as its ownership of AFG ASIT 
Corporation. Equis II Corporation is controlled by EFG's President and Chief 
Executive Officer, Gary D. Engle. Accordingly, control of the Managing 
Trustee did not change as a result of the foregoing transactions.
 
    As described in the Prospectus for the offering of the Class B Interests,
the Managing Trustee used a portion of the net cash proceeds realized from the
offering of the Class B Interests to pay a one-time special cash distribution of
approximately $1.47 per Class A Beneficiary Interest to the Class A
Beneficiaries of the Trust. The Managing Trustee declared and paid this special
cash distribution, aggregating $979,449, to Class A Beneficiaries on August 15,
1997.
 
NOTE 10--OFFER TO REDEEM CLASS A INTERESTS
 
    On August 7, 1997, the Trust commenced an offer to purchase up to 45% of the
outstanding Class A Beneficiary Interests of the Trust by filing a Form 13E-4,
Issuer Tender Offer Statement, with the SEC and distributing to the Class A
Beneficiaries information (the "Tender Documents") concerning the offer. On
October 10, 1997, the Trust used $785,295 of the net proceeds realized from the
offering of the Class B Interests to purchase 82,837 of the Class A Beneficiary
Interests tendered as a result of the offer.


                                       10
<PAGE>

                             AFG INVESTMENT TRUST B
 
                                 FORM 10-Q

                           PART I. FINANCIAL INFORMATION
 
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
        OF OPERATIONS.
 
    Certain statements in this quarterly report that are not historical fact
constitute "forward-looking statements" within the meaning of the Private
Securities Litigation Reform Act of 1995 and are subject to a variety of risks
and uncertainties. There are a number of important factors that could cause
actual results to differ materially from those expressed in any forward-looking
statements made herein. These factors include, but are not limited to, the
ability of EFG to collect all rents due under the attendant lease agreements and
successfully remarket the Trust's equipment upon the expiration of such leases.
 
THREE AND NINE MONTHS ENDED SEPTEMBER 30, 1997 COMPARED TO THE THREE AND NINE 
MONTHS ENDED SEPTEMBER 30, 1996:
 
OVERVIEW
 
    As an equipment leasing trust, AFG Investment Trust B (the "Trust") was 
organized to acquire a diversified portfolio of capital equipment subject to 
lease agreements with third parties. The Trust was designed to progress 
through three principal phases: acquisitions, operations, and liquidation. 
During the operations phase, a period of approximately six years, all 
equipment in the Trust's portfolio will progress through various stages. 
Initially, all equipment will generate rental revenues under primary term 
lease agreements. During the life of the Trust, these agreements will expire 
on an intermittent basis and equipment held pursuant to the related leases 
will be renewed, re-leased or sold, depending on prevailing market conditions 
and the assessment of such conditions by EFG to obtain the most advantageous 
economic benefit. Over time, a greater portion of the Trust's original 
equipment portfolio will become available for remarketing and cash generated 
from operations and from sales or refinancings will begin to fluctuate. 
Ultimately, all equipment will be sold and the Trust will be dissolved. The 
Trust's operations commenced in 1992.
 
RESULTS OF OPERATIONS
 
    For the three and nine months ended September 30, 1997, the Trust recognized
lease revenue $1,281,262 and $3,991,832, respectively, compared to $1,549,287
and $4,434,013 for the same periods in 1996. The decrease in lease revenue from
1996 to 1997 is due to primary lease term expirations and the sale of equipment.
In the future, the level of lease revenue will continue to decline due to the
continued expiration of the Trust's primary lease term agreements and equipment
sales. The Trust also earns interest income from temporary investments of rental
receipts and equipment sales proceeds in short-term instruments.
 
    The Trust's equipment portfolio includes certain assets in which the Trust
holds a proportionate ownership interest. In such cases, the remaining interests
are owned by EFG or an affiliated equipment leasing program sponsored by EFG.
Proportionate equipment ownership enables the Trust to further diversify its
equipment portfolio by participating in the ownership of selected assets,
thereby reducing the general levels of risk which could result from a
concentration in any single equipment type, industry or lessee. The Trust and
each affiliate individually report, in proportion to their respective ownership
interests, their respective shares of assets, liabilities, revenues, and
expenses associated with the equipment.
 
    During the three and nine months ended September 30, 1997, the Trust sold
equipment having a net book value of $119,606 and $139,527, respectively to
existing lessees and third parties. These sales resulted in a net gain, for
financial statement purposes, of $118,513 and $124,976, respectively.

                                       11

<PAGE>
                              AFG INVESTMENT TRUST B
 
                                 FORM 10-Q

                           PART I. FINANCIAL INFORMATION


    On February 5, 1996, the Trust concluded the sale of its interest in a
Boeing 747-SP Aircraft (the "United Aircraft") to the lessee, United Air Lines
Inc., ("United"), as reported in Note 3 to the Trust's 1996 Annual Report. The
Trust recognized a net loss of $560,982 in connection with this transaction, of
which $384,782 was recognized as Write-Down of Equipment in 1995. The remainder
of $176,200 was recognized as a loss on sale of equipment on the accompanying
Statement of Operations for the nine months ended September 30, 1996. In
addition to lease rents, the Trust received net sale proceeds of $1,684,292 from
United for the aircraft. A portion of such sale proceeds was reinvested in other
equipment in March 1996 through the acquisition of an 8.86% ownership interest
in an aircraft (the "Reno Aircraft") at an aggregate cost to the Trust of
$1,239,741. To acquire its interest in the Reno Aircraft, the Trust obtained
long-term financing of $997,888 from a third-party lender and utilized cash
proceeds of $241,853 from the sale of the United Aircraft. During the three and
nine months ended September 30, 1996, the Trust sold other equipment having a
net book value of $71,017 and $261,511, respectively, to existing lessees and
third parties. These sales resulted in a net loss, for financial statement
purposes, of $1,063 and $99,688, respectively.
 
    It cannot be determined whether future sales of equipment will result in 
a net gain or a net loss to the Trust, as such transactions will be dependent 
upon the condition and type of equipment being sold and its marketability at 
the time of sale. In addition, the amount of gain or loss reported for 
financial statement purposes is partly a function of the amount of 
accumulated depreciation associated with the equipment being sold.
 
    The ultimate realization of residual value for any type of equipment is
dependent upon many factors, including EFG's ability to sell and re-lease
equipment. Changing market conditions, industry trends, technological advances,
and many other events can converge to enhance or detract from asset values at
any given time. EFG attempts to monitor these changes in order to identify
opportunities which may be advantageous to the Trust and which will maximize
total cash returns for each asset.
 
    The total economic value realized upon final disposition of each asset is
comprised of all primary lease term revenue generated from that asset, together
with its residual value. The latter consists of cash proceeds realized upon the
asset's sale in addition to all other cash receipts obtained from renting the
asset on a re-lease, renewal or month-to-month basis. The Trust classifies such
residual rental payments as lease revenue. Consequently, the amount of gain or
loss reported in the financial statements is not necessarily indicative of the
total residual value the Trust achieved from leasing the equipment.
 
    Depreciation and amortization expense for the three and nine months ended
September 30, 1997 was $956,700 and $2,987,813, respectively, compared to
$1,058,070 and $3,289,919 for the same periods in 1996. For financial reporting
purposes, to the extent that an asset is held on primary lease term, the Trust
depreciates the difference between (i) the cost of the asset and (ii) the
estimated residual value of the asset on a straight-line basis over such term.
For purposes of this policy, estimated residual values represent estimates of
equipment values at the date of primary lease expiration. To the extent that an
asset is held beyond its primary lease term, the Trust continues to depreciate
the remaining net book value of the asset on a straight-line basis over the
asset's remaining economic life.
 
    Interest expense was $43,933 and $159,719 or 3.4% and 4% of lease revenue
for the three and nine months ended September 30, 1997, respectively, compared
to $86,503 and $309,697 or 5.6% and 7% of lease revenue for the same periods in
1996. In the future, interest expense is expected to continue to decline in
amount and as a percentage of lease revenue as the principal balance of notes
payable is reduced through the application of rent receipts to outstanding debt.
 
    Management fees were approximately 4.4% and 4.3% of lease revenue for the
three and nine months ended September 30, 1997, respectively, compared to 4.3%
and 4.2% for the same periods in 1996. Management fees 

                                       12

<PAGE>

                             AFG INVESTMENT TRUST B
 
                                 FORM 10-Q

                           PART I. FINANCIAL INFORMATION

are based on 5% of gross lease revenue generated by operating leases and 2% 
of gross lease revenue generated by full payout leases.
 
    Operating expenses consist principally of administrative charges,
professional service costs, such as audit and legal fees, as well as printing,
distribution and remarketing expenses. Collectively, operating expenses
represented 9.2% and 5.4% of lease revenue for the three and nine months ended
September 30, 1997, respectively, compared to 2.4% and 1.9% of lease revenue for
the same periods in 1996. The increase in operating expenses from 1996 to 1997
was due primarily to costs incurred in connection with the Solicitation and
Registration Statements described in Note 9 to the accompanying financial
statements and increases in administrative charges and professional service
costs. The amount of future operating expenses cannot be predicted with
certainty; however, such expenses are usually higher during the acquisition and
liquidation phases of a trust. Other fluctuations typically occur in relation to
the volume and timing of remarketing activities.
 
LIQUIDITY AND CAPITAL RESOURCES AND DISCUSSION OF CASH FLOWS
 
    The Trust by its nature is a limited life entity which was established for
specific purposes described in the preceding "Overview". As an equipment leasing
program, the Trust's principal operating activities derive from asset rental
transactions. Accordingly, the Trust's principal source of cash from operations
is provided by the collection of periodic rents. These cash inflows are used to
satisfy debt service obligations associated with leveraged leases, and to pay
management fees and operating costs. Operating activities generated net cash
inflows of $3,532,611 and $4,254,327 for the nine months ended September 30,
1997 and 1996, respectively. Future renewal, re-lease and equipment sale
activities will cause a gradual decline in the Trust's primary-term lease
revenue and corresponding sources of operating cash. Overall, expenses
associated with rental activities, such as management fees, and net cash flow
from operating activities will decline as the Trust experiences a higher
frequency of remarketing events.
 
    The Trust's equipment is leased by a number of creditworthy,
investment-grade companies and, to date, the Trust has not experienced any
material collection problems and has not considered it necessary to provide an
allowance for doubtful accounts. Notwithstanding a positive collection history,
there is no assurance that all future contracted rents will be collected or that
the credit quality of the Trust's lessees will be maintained. Collection risk
could increase in the future, particularly as the Trust remarkets its equipment
and enters re-lease agreements with different lessees. The Managing Trustee will
continue to evaluate and monitor the Trust's experience in collecting accounts
receivable to determine whether a future allowance for doubtful accounts may
become appropriate.
 
    Ultimately, the Trust will dispose of all assets under lease. This will
occur principally through sale transactions whereby each asset will be sold to
the existing lessee or to a third party. Generally, this will occur upon
expiration of each asset's primary or renewal/re-lease term. In certain
instances, casualty or early termination events may result in the disposal of an
asset. Such circumstances are infrequent and usually result in the collection of
stipulated cash settlements pursuant to terms and conditions contained in the
underlying lease agreements.
 
    Cash expended for asset acquisitions and cash realized from asset disposal
transactions are reported under investing activities on the accompanying
Statement of Cash Flows. During the nine months ended September 30, 1997, the
Trust realized equipment sale proceeds of $264,503. During the same period in
1996, the Trust realized equipment sale proceeds of $1,846,115, including
$1,684,292 of proceeds from the United Aircraft. Future inflows of cash from
asset disposals will vary in timing and amount and will be influenced by many
factors including, but not limited to, the frequency and timing of lease
expirations, the type of equipment being sold, its condition and age, and future
market conditions. The Trust expended $1,441,796 to acquire equipment 

                                       13

<PAGE>

                             AFG INVESTMENT TRUST B
 
                                 FORM 10-Q

                           PART I. FINANCIAL INFORMATION

during the nine months ended September 30, 1996. This amount reflects the 
acquisition of an ownership interest in a commercial jet aircraft at a cost 
of $1,239,741, pursuant to the reinvestment provisions of the Trust Agreement 
and an original equipment acquisition of $202,055. The reinvestment equipment 
was financed through a combination of leveraging and the sale proceeds 
available from the aircraft transaction, discussed above. There were no 
equipment acquisitions during the same period in 1997.
 
    The Trust obtained long-term financing in connection with certain 
equipment leases. The origination of such indebtedness and the subsequent 
repayments of principal are reported as components of financing activities. 
Cash inflows of $997,888 in 1996, resulted from leveraging a portion of the 
Trust's equipment portfolio with third-party lenders. Each note payable is 
recourse only to the specific equipment financed and to the minimum rental 
payments contracted to be received during the debt amortization period (which 
period generally coincides with the lease rental term). As rental payments 
are collected, a portion or all of the rental payment is used to repay the 
associated indebtedness. In future periods, the amount of cash used to repay 
debt obligations will decline as the principal balance of notes payable is 
reduced through the collection and application of rents. However, the Trust 
has a balloon payment obligation of $282,421 at the expiration of the primary 
lease term related to the Reno Aircraft. In addition, the Managing Trustee 
expects to use a portion of the Trust's available cash to retire certain 
indebtedness.
 
    For financial reporting purposes, the Managing Trustee and the Special
Beneficiary each have accumulated a capital deficit at September 30, 1997. This
is the result of aggregate cash distributions to these Participants being in
excess of their aggregate capital contributions ($1,000 each) and their
respective allocations of financial statement net income or loss. Ultimately,
the existence of a capital deficit for the Managing Trustee or the Special
Beneficiary for financial reporting purposes is not indicative of any further
capital obligations to the Trust by either the Managing Trustee or the Special
Beneficiary.
 
    For income tax purposes, income is allocated first to those Participants
having negative tax capital account balances so as to eliminate any such
balances. In accordance with the Trust Agreement, upon the dissolution of the
Trust, the Managing Trustee will be required to contribute to the Trust an
amount equal to any negative balance which may exist in the Managing Trustee's
tax capital account. No such requirement exists with respect to the Special
Beneficiary. At December 31, 1996, the Managing Trustee had a positive tax
capital account balance.
 
    At September 30, 1997, the Trust had aggregate future minimum lease payments
of $3,801,527 from contractual lease agreements (see Note 3 to the financial
statements), a portion of which will be used to amortize the principal balance
of notes payable (see Note 6 to the financial statements). Additional cash
inflows will be realized from future remarketing activities, such as lease
renewals and equipment sales, the timing and extent of which cannot be predicted
with certainty. This is because the timing and extent of equipment sales is
often dependent upon the needs and interests of the existing lessees. Some
lessees may choose to renew their lease contracts, while others may elect to
return the equipment. In the latter instances, the equipment could be re-leased
to another lessee or sold to a third party. Accordingly, as the Trust matures
and a greater level of its equipment assets become available for remarketing,
the cash flows of the Trust will become less predictable. In addition, the Trust
will have cash outflows to satisfy interest on indebtedness and to pay
management fees and operating expenses. Ultimately, the Trust is expected to
meet its future disbursement obligations and to distribute any excess of cash
inflows over cash outflows to the Participants in accordance with the Trust
Agreement. However, several factors, including month-to-month lease extensions,
lessee defaults, equipment casualty events, and early lease terminations could
alter the Trust's anticipated cash flows as described herein and in the
accompanying financial statements and result in fluctuations to the Trust's
periodic cash distribution payments.

                                       14

<PAGE>
                             AFG INVESTMENT TRUST B
 
                                 FORM 10-Q

                           PART I. FINANCIAL INFORMATION
 
    On February 12, 1997, the Trust filed a Registration Statement on Form 
S-1 with the SEC, which became effective June 10, 1997. The Registration 
Statement covered the issuance and sale of a new class of beneficiary 
interests in the Trust (the "Class B Interests"). The characteristics of the 
Class B Interests, associated risk factors and other matters of importance to 
the Beneficiaries and purchasers of the Class B Interests were set forth in a 
Prospectus sent to the Beneficiaries. On July 17, 1997, the offering closed 
and on July 18, 1997 the Trust issued 1,000,961 Class B Interests at $5.00 
per interest, thereby generating $5,004,805 in aggregate Class B capital 
contributions. Class A Beneficiaries purchased 3,588 Class B Interests, 
generating $17,940 of such aggregate capital contributions, and the Special 
Beneficiary, EFG, purchased 997,373 of such Class B Interests, generating 
$4,986,865 of such aggregate capital contributions. The Trust incurred costs 
in the amount of $50,048 in connection with this offering.
 
    Subsequently, EFG transferred its Class B Interests to a special-purpose
company, Equis II Corporation, a Delaware corporation. EFG also transferred its
ownership of AFG ASIT Corporation, the Managing Trustee of the Trust, to Equis
II Corporation. As a result, Equis II Corporation has voting control of the
Trust through its ownership of the majority of all of the Trust's outstanding
voting interests, as well as its ownership of AFG ASIT Corporation. Equis II
Corporation is controlled by EFG's President and Chief Executive Officer, Gary
D. Engle. Accordingly, control of the Managing Trustee did not change as a
result of the foregoing transactions.
 
    As described in the Prospectus for the offering of the Class B Interests,
the Managing Trustee used a portion of the net cash proceeds realized from the
offering of the Class B Interests to pay a one-time special cash distribution to
the Class A Beneficiaries of the Trust. The Managing Trustee declared and paid
this special cash distribution of approximately $1.47 per Class A Beneficiary
Interest, aggregating $979,449, to the Class A Beneficiaries on August 15, 1997.
 
    On August 7, 1997, the Trust commenced an offer to purchase up to 45% of the
outstanding Class A Beneficiary Interests of the Trust by filing a Form 13E-4,
Issuer Tender Offer Statement, with the SEC and distributing to the Class A
Beneficiaries information (the "Tender Documents") concerning the offer. On
October 10, 1997, the Trust used $785,295 of the net proceeds realized from the
offering of the Class B Interests to purchase 82,837 of the Class A Beneficiary
Interests tendered as a result of the offer. The Tender Documents describe,
among other things, the terms of the offer and the purchase price per Class A
Beneficiary Interest being offered by the Trust
 
    Cash distributions paid to the Participants consist of both a return of and
a return on capital. Cash distributions do not represent and are not indicative
of yield on investment. Actual yield on investment cannot be determined with any
certainty until conclusion of the Trust and will be dependent upon the
collection of all future contracted rents, the generation of renewal and/or
re-lease rents, and the residual value realized for each asset at its disposal
date. Future market conditions, technological changes, the ability of EFG to
manage and remarket the assets, and many other events and circumstances, could
enhance or detract from individual asset yields and the collective performance
of the Trust's equipment portfolio.
 
    It is the intention of the Managing Trustee to maintain a cash 
distribution level that is consistent with the operating cash flows of the 
Trust and to optimize the long-term value of the Trust. A distribution level 
that is higher than the Trust's operating cash flows could compromise the 
Trust's working capital position, as well as its ability to refurbish or 
upgrade equipment in response to lessee requirements or other market 
circumstances. Accordingly, in order to better align monthly cash 
distributions with the Trust's operating cash flows, the Managing Trustee 
reduced the level of monthly cash distributions from an annualized rate of 
$2.52 per Class A Beneficiary Interest (the rate established and paid from 
the Trust's inception through September 1995) to an annualized rate of $1.26 
per Class A Beneficiary Interest commencing in October 1995. In October 1996, 
the Managing Trustee increased the annualized distribution rate to $1.64 per 
Class A Beneficiary Interest and expects that the Trust will be able to 

                                       15

<PAGE>
                             AFG INVESTMENT TRUST B
 
                                 FORM 10-Q

                           PART I. FINANCIAL INFORMATION

sustain this distribution rate throughout 1997. For the Class B 
Beneficiaries, the Managing Trustee established and paid, from the Trust, an 
annualized distribution of $0.66 per Class B Beneficiary Interest in August 
1997. The Managing Trustee also expects to maintain this distribution 
throughout 1997. Future distributions with respect to Class B Beneficiaries, 
will be subordinate to certain distributions to Class A Interests.
 
    The nature of the Trust's principal cash flows gradually will shift from
rental receipts to equipment sale proceeds as the Trust matures. As this occurs,
the Trust's cash flows will become more volatile in that certain of the Trust's
equipment leases will be renewed and certain of its assets will be sold. In some
cases, the Trust may be required to expend funds to refurbish or otherwise
improve the equipment being remarketed in order to make it more desirable to a
potential lessee or purchaser. The Trust's Advisor, EFG, and the Managing
Trustee will attempt to monitor and manage these events to maximize the residual
value of the Trust's equipment and will consider these factors, in addition to
the collection of contractual rents, the retirement of scheduled indebtedness
and the Trust's future working capital and equipment requirements, in
establishing future cash distribution rates. Ultimately, the Beneficiaries
should expect that cash distribution rates will fluctuate over the long term as
a result of future remarketing activities.
 
    Cash distributions to the Managing Trustee, the Special Beneficiary and the
Beneficiaries are declared and generally paid within 45 days following the end
of each calendar month. The payment of such distributions is presented as a
component of financing activities. For the nine months ended September 30, 1997,
the Trust declared total cash distributions of Distributable Cash From
Operations and Distributable Cash From Sales and Refinancings of $2,003,245. In
accordance with the Trust Agreement, as Amended, the Beneficiaries were
allocated 90.75% of these distributions, or $1,817,945 ($1,683,795 for Class 
A Beneficiaries and $134,150 for Class B Beneficiaries); the Special 
Beneficiary was allocated 8.25%, or $165,268; and the Managing Trustee was 
allocated 1%, or $20,032.
 
                                       16
<PAGE>

                             AFG INVESTMENT TRUST B

                                   FORM 10-Q

                          PART II. OTHER INFORMATION


<TABLE>
<S>              <C>
Item 1.            Legal Proceedings 
                   Response:
                        
                   Refer to Note 8 to the financial statements herein.

Item 2.            Changes in Securities 
                   Response:

                   On July 18, 1997, the Trust issued 1,000,961 Class B 
                   Interests at $5.00 per interest, generating $5,004,805 in 
                   aggregate Class B capital contributions. Class A 
                   Beneficiaries purchased 3,588 Class B Interests, generating
                   $17,940 of such aggregate capital contributions, and the 
                   Special Beneficiary, EFG, purchased 997,373 Class B 
                   Interests, generating $4,986,865 of such aggregate capital 
                   contributions. Subsequently, EFG transferred its Class B 
                   Interests to a special-purpose company, Equis II Corporation.
                   (See Note 9 to the accompanying financial statements.)

                   The Trust Agreement grants limited voting rights to the 
                   Class A Beneficiaries and Class B Beneficiaries. However, 
                   each Class A Beneficiary and Class B Beneficiary is entitled
                   to cast one vote for each Interest owned by him or her. 
                   Equis II Corporation has voting control of the Trust through
                   its ownership of its Class B Interests.
 
                   Future cash distributions with respect to the Class B 
                   Interests will be subordinate to certain distributions with 
                   respect to the Class A Interests.
 
Item 3.            Defaults upon Senior Securities 
                   Response: None
 
Item 4.            Submission of Matters to a Vote of Security Holders 
                   Response: None
 
Item 5.            Other Information 
                   Response: None
 
Item 6(a).         Exhibits 
                   Response: None
 
Item 6(b).         Reports on Form 8-K 
                   Response: None
</TABLE>
 

                                      17

<PAGE>

                                 SIGNATURE PAGE 


    Pursuant to the requirements of the Securities Exchange Act of
1934, this report has been signed below on behalf of the registrant and in the
capacity and on the date indicated. 

                             AFG Investment Trust B 
<TABLE>

<S>               <C>
By:                AFG ASIT Corporation, a Massachusetts corporation and the 
                   Managing Trustee of the Registrant. 

By:                /s/ Michael J. Butterfield 
                   -----------------------------------------------------------
                   Michael J. Butterfield 
                   Treasurer of AFG ASIT Corporation 
                   (Duly Authorized Officer and Principal Accounting Officer) 

Date:              November 14, 1997
                   -----------------------------------------------------------

By:                /s/ Gary M. Romano
                   -----------------------------------------------------------
                   Gary M. Romano
                   Clerk of AFG ASIT Corporation 
                   (Duly Authorized Officer and Principal Financial Officer) 

Date:              November 14, 1997
                   -----------------------------------------------------------

</TABLE>
                                      18